Posted on 06/30/2015 10:32:51 AM PDT by bananaman22
The oil price collapse of 2014-2015 began one year ago this month (Figure 1). The world crossed a boundary in which prices are not only lower now but will probably remain lower for some time. It represents a phase change like when water turns into ice: the composition is the same as before but the physical state and governing laws are different.*
For oil prices, the phase change was caused mostly by the growth of a new source of supply from unconventional, expensive oil. Expensive oil made sense only because of the longest period ever of high oil prices in real dollars from late 2010 until mid-2014. The phase change occurred also because of a profoundly weakened global economy and lower demand growth for oil. This followed the 2008 Financial Collapse and the preceding decades of reliance on debt to create economic expansion in a world approaching the limits of growth.
(Excerpt) Read more at oilprice.com ...
Slump? Been to the pump lately?
Current Oil Price Slump Far From Over
http://www.freerepublic.com/focus/f-news/3306042/posts
Posted on 6/30/2015, 7:45:36 AM
Yeah, ticks you off, doesn't it?
Two reasons.
1) EPA regulations, including a gazillion different blends. The feds are doing everything they can to keep gas prices up
2) The price linkage between a barrel of oil and retail gasoline is mostly gone. Used to be a dollar a barrel equaled 3¢ a gallon for gas. Today's contracts for August delivery: Oil up 60¢ a barrel, gas up 5¢ a gallon. Gas demand is fairly inelastic, making it a popular commodity for all those newly created dollars looking for a return in the Fed's forever 0% interest rate environment.
I LOL whenever I see/hear some fool say we have free markets. The nanny state has wrecked the cost relationship between supply & demand. If the markets ever correct themselves it will be very dramatic....and unpleasant.
That is what I say. Prices have shot up here $.45 or more in the past couple of months. Some slump.
False, but you do have to use the correct oil price.
U.S. gasoline prices move with Brent rather than WTI crude oil
http://www.eia.gov/todayinenergy/detail.cfm?id=18651
This is awesome. The first good explanation I have read. I was all caught up on the demand side, seeing falling oil prices as a function of the fact the world hasn’t emerged from the global recession. But what we have is roughly an extra 6 million barrels (approx.) per day since 2008.
One wonders how this caught everyone off guard, which it obviously did with the massive volatility in oil prices.
Thanks, I didn’t take that into account.
It doesn’t help us that almost all US media that compares the two, uses WTI instead of Brent.
WTI is a landlocked price and began varying significantly from Brent as we got a backup in the pipeline capacity coming out of Cushing a few years back. Before that, the almost always moved in price together.
Global demand for continued to climb for oil in the same time period. In the past year or so, it slowed down the growth rate relative to the supply growth rate, but they both were climbing since then.
Look at the Production and Consumption Balance chart at:
SHORT-TERM ENERGY OUTLOOK, Global Petroleum and Other Liquids
http://www.eia.gov/forecasts/steo/report/global_oil.cfm
So what explains gas prices then?
Which I find strange if the world is doing so badly economically? I mean even China has slowed its GDP.
Slowed is not stopped.
Global primary energy consumption decelerated sharply in 2014, even though global economic growth was similar to 2013
Consumption increased for all fuels, reaching record levels for every fuel type except nuclear power; production increased for all fuels except coal. For oil and natural gas, global consumption growth was weaker than production.
Global primary energy consumption increased by just 0.9% in 2014, a marked deceleration over 2013 (+2.0%) and well below the 10-year average of 2.1%. Growth in 2014 slowed for every fuel other than nuclear power, which was also the only fuel to grow at an above-average rate. Growth was significantly below the 10-year average for Asia Pacific, Europe & Eurasia, and South & Central America. Oil remained the world’s leading fuel, with 32.6% of global energy consumption, but lost market share for the fifteenth consecutive year.
Although emerging economies continued to dominate the growth in global energy consumption, growth in these countries (+2.4%) was well below its 10-year average of 4.2%. China (+2.6%) and India (+7.1%) recorded the largest national increments to global energy consumption. OECD consumption fell by 0.9%, which was a larger fall than the recent historical average. A second consecutive year of robust US growth (+1.2%) was more than offset by declines in energy consumption in the EU (-3.9%) and Japan (-3.0%). The fall in EU energy consumption was the second-largest percentage decline on record (exceeded only in the aftermath of the financial crisis in 2009).
Thanks for that. It is now in line with world population growth, which I think is about 1%.
Didn’t the southern section of the Keystone alleviate some of the backup at Cushing?
Cushing oil hub getting bigger with new pipeline projects
http://www.tulsaworld.com/businesshomepage1/cushing-oil-hub-getting-bigger-with-new-pipeline-projects/article_aab841f4-9d68-5e71-ac5a-5b58b9eda698.html
It is still somewhat separated:
Better than it was:
Not as good as it should be:
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.